In its report on poverty and inequality, the National Bureau of Statistics stated that 40% of Nigerians live below their poverty line, which is N137,430 per year.
Nigeria ’s high poverty rate data is the data we first rejected, which is considered untrue, but in the end people are satisfied with its tragic reality. For a country with one of the largest economies in the world, the intimidating results indicate that we have failed, and we would rather hide behind a strong economy or a large active population.
But we cannot pretend for a long time, because soon Nigeria replaced India as the poverty capital of the world.
The National Bureau of Statistics (NBS) stated in its poverty and inequality report from September 2018 to October 2019 that 40% (82.9 million) of Nigeria ’s population lives below its poverty line, which is N137,430 ($ 381.75).
The northern states are ranked the poorest. Nine of the ten poorest states in the country are due to the Boko Haram rebellion, mass unemployment rate, low access to medical services and millions of children who are out of school-all of which are caused by COVID-19 exacerbated pandemic.
According to recent estimates, the World Bank estimates which is between 40 and 60 million people will be in extreme poverty (less than US $ 1.90 per day) in 2020 due to Covid-19, and this number in 2019 will depend on extreme poverty assumption . Economic shock. Even though statistics are not good by themselves, they contain many other facts. One of them is the purchasing power of the average Nigerian.
Poverty and Nigerian purchasing power
The World Bank divides poverty into three levels: people who live on less than $ 1.90 a day, people who live on less than $ 3.20 a day, and people who live on less than $ 5.50 a day. Prior to this, the 1990 World Development Report had set the international poverty line at $ 1 per day.
However, the poverty line has been updated to more accurately describe the actual cost of living in different countries.
As the poorest country in Africa, it is safe to say that Nigeria’s average level falls into the category of less than $ 1.90 per day, less than $ 3.20 per day or less than $ 5.50 per day.
Calculated in Naira, using the exchange rate of N390 to 1 US dollar means that Nigerians can spend N741, N1,248 or N2,145 on average per day.
These funds are used for housing, meals, clothing, communications and other expenditures. The 2019 expenditure pattern report is a measure of Nigeria ’s expenditure patterns on food and non-food items. It shows that 56.65% of household expenditures in 2019 are used for food expenditures, of which approximately 43.35 balances are used for non-food items .
In addition, just this month, a survey conducted by FinMark Trust in cooperation with EFInA showed that after the popularity of COVID-19, Nigerian households ’incomes began to decrease, food consumption decreased, and access to financial and medical services decreased and related lock-in. Therefore, low purchasing power is now lower.
The meaning of our purchasing power reveals two core truths:
- Industries that did not meet the necessities of life immediately eliminated most of the population.
- Even companies in the core industry that are priced higher than Nigeria ’s average minimum consumption will eliminate millions of potential customers.
More importantly, these values represent the spread of expenditure. In other words, since N1,248 can be spent on almost everything, even the most important cost items will only be allocated a small portion.
What this means:
A business owner with a core product (N1,000 only), you have provided luxury services in a Nigerian environment. Commodities sold at these price points, such as recharge cards, sports betting, sachet milk, etc., because of the huge share of most Nigerians’ spending power, can often stabilize the business.
In fact, the essence of market segmentation is to divide many customers into multiple subgroups, which is that all enterprises cannot meet the needs of all markets. However, the temptation to keep prices low may also mean that Nigerians may receive less value in order to be able to afford the product. This shows the real purchasing power of Nigerians, which is worrying and enlightening at the same time, because obviously our high poverty rate affects each of us.
Photo by RNW.org